Modelo 720 Sanctions: What European justice says

The 720 Form remains one of the most closely monitored tax filings for Spanish residents with foreign assets. After the European Court of Justice (ECJ) ruling, the sanction system changed, but non-compliance still has a cost. This guide explains the real risks in 2026, current penalty amounts, and how to reduce the risk of a tax audit.

How penalties worked before the ECJ

Until 2022, the 720 Form had one of the strictest penalty systems in Spanish tax law, which the EU considered disproportionate:

Fixed fines: €5,000 for each omitted or incorrect data point.
No statute of limitations: Tax authorities could sanction assets from decades ago.
150% penalty: In some cases, the undeclared asset value was treated as an unjustified capital gain, with a corresponding fine.

This changed, but the obligation to declare foreign assets over €50,000 (bank accounts, securities, insurance, or real estate) remains.

Current penalties in 2026

Today, penalties are governed by the General Tax Law (LGT). Fixed amounts are lower, but the real risk comes from audits and proportional sanctions:

Failure to file (with prior notice): €20 per data point, minimum €300, maximum €20,000.
Late voluntary submission: €10 per data point, minimum €150.
Audit risk: If the tax authorities discover undeclared assets, they may include them in your personal income tax as unjustified capital gains, applying penalties of up to 50% of the total value.

Important: penalties can accumulate quickly if multiple assets or accounts are involved.

What the European Court and current rules say

The ECJ forced Spain to normalize Form 720. Key changes for 2026:

Proportionality: Fines cannot exceed the value of the assets in an unreasonable way.
4-year statute of limitations: Authorities cannot investigate prescribed assets under the pretext of Form 720.
Form 721: For cryptocurrencies held in foreign exchanges, this new form must be used.

Declaring late, incorrectly, or not at all is still risky. The EU limited some excesses but does not exempt taxpayers.

Real penalty examples in 2026

Omission of an account with 10 data points: minimum fine €300, with real risk of a full audit.
Error in 50 data points of a securities portfolio: fine can reach €1,000 (20 € × 50 data points).
Late voluntary submission: minimum fine €150 if corrected before prior notice.

Although not the €5,000 per data point of the past, penalties remain significant and can increase quickly with multiple assets.

How to reduce the risk of penalties

Form 720 is complex: country codes, valuations, asset types… this is where tools like Aitax help:

Direct document upload: Upload your documents, and the AI will extract all relevant data and convert it into the Form 720 format.
Error validation: Detects incomplete fields or incorrect formats before submission.
Updated regulatory support: Trained on Form 720 regulations and AEAT FAQs 2026.
Official file ready: You get the file ready for electronic submission, fully compliant and minimizing risks.

With Aitax, you reduce the risk of penalties and avoid unnecessary audits.

Frequently Asked Questions

Am I obliged if I have less than €50,000?
No, only if the total value of one of the three asset blocks (accounts, securities/insurance, or real estate) exceeds €50,000 on December 31.

What if my cryptocurrencies increased in value?
If held in foreign exchanges and above €50,000, you must file Form 721, with similar penalties.

Can I be penalized for minor errors?
Yes, €20 per incorrect data point if there is prior notice. Reviewing your declaration carefully is essential.

Conclusion

Although the astronomical €5,000 per data point fines are history, Form 720 in 2026 remains a powerful fiscal control tool. A late, incorrect, or missing declaration can result in accumulated fines and a full audit.

Prevention is key. Using solutions like Aitax allows you to comply efficiently, professionally, and safely.